99) Perth Electronics Company allows its divisions to operate as autonomous units. The

operating data for 2014 follow:

TVs Photography Computers

Revenues $4 500 000 $1 000 000 $9 600 000

Accounts receivable 1 600 000 305 000 2 870 000

Operating assets 2 000 000 800 000 3 500 000

Net operating profit 440 000 120 000 960 000

Taxable income 330 000 180 000 770 000

99)

38

Taxable income 330 000 180 000 770 000

Required:

a. Calculate the investment turnover for each division.

b. Calculate the return on sales for each division.

c. Calculate the return on investment for each division.

d. Which division manager is doing best? Why?

e. What other factors should be included when evaluating the managers?

For parts (b) and (c) income is defined as operating profit.

 

 

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